Nine named plaintiffs claims that in 2005 Mortgages Ltd. was forced to “adopt a Ponzi approach in which an ever-expanding base of investor money was borrowed to cover operating expenses, investor interest, investor redemptions,” and the extravagant lifestyle of its CEO Scott Coles. Coles is dead, an apparent victim of suicide in June 2008, just before Mortgages Ltd. filed for bankruptcy. He was reported to have died of an overdose of pills and alcohol, dressed in a tux, surrounded by a “shrine” to his ex-wife. Before his exit, the class claims, Coles sought help from his accountant, defendant Tom Hirsch, who had access to money from about 900 investors through his company, Radical Bunny, which “he could use to fund a revolving line of credit to supplement new money that Coles was obtaining from his own investors.” The class claims that Coles and Hirsch never told them that Mortgages Ltd. was underwater and was borrowing about $200 million from Radical Bunny, which was “illegally operating as an unlicensed securities dealer for Mortgages Ltd.” Because Mortgages Ltd. never made payments on its Radical Bunny loans, Radical Bunny had to raise new money to meet redemption requests from old investors and did not disclose to investors that it was the money from new investors that was funding the redemption requests, the lawsuit claims. Radical Bunny, Hirsch and manager “Bunny” Walder then allegedly “misled their investors by falsely assuring them that their investments were secured by Mortgages Ltd.’s assets,” though there was no security. The class claims that Greenberg Traurig and Quarles & Brady “played a substantial role in inducing the illegal sales,” since they knew that the two investment groups were funded through illegal securities sales, yet continued to prepare private-offering memoranda for investors. (Nonparty) Robert Kant, a Greenberg Traurig partner, allegedly said that Hirsh could “go to jail for Radical Bunny’s securities violations and that both Hirsch and Coles could end up on the front page of the Arizona Republic,” and a Quarles & Brady partner allegedly claimed that the investment group’s relationship “had a Ponzi scheme feel” to it. When Mortgages Ltd. filed for bankruptcy it owed investors $700 million and owed Radical $197 million in loans, according to the complaint. In January this year, Mortgages Ltd. agreed to an SEC order revoking its registration as a securities dealer. The SEC settlement did not return any money to investors, though; the SEC found that it did not have the money available. The class seeks damages for securities fraud, aiding and abetting and negligent misrepresentation. It is represented by Richard Himelrick with Tiffany & Bosco and Andrew Friedman with Bonnet, Fairbourn, Friedman & Balint.